Step off the plane in Nairobi and the energy is palpable. At least some of this is demographics, Africa’s population has grown from 883 million in 2000 to 1.37 billion in 2021, 70% of people are under the age of 30, the average age is 19. Kenya’s population is no exception.
But demographics are not all. Africa is on the rise. The continent is being transformed; with increasing urbanisation, a growing middle class, an expanding and prosperous diaspora, greater connectivity and increasing investment, all coupled with a cornucopia of natural resources.
These are much storied trends, the subject of McKinsey Featured Insights and World Bank studies, the content of startup pitches and VC reports and the basis of a growing investor ecosystem.
But there is something else, another source of wealth, a deeper well of prosperity, that outsiders often miss and that African’s can take for granted, not out of ingratitude, but because it is the water they swim in, so intuitive, so familiar, so part of the social fabric as to almost be invisible — Social Capital.
Social Capital in Africa
For despite its reputation for social and political dysfunction, Africa is rich in the stuff. Indeed if social capital were a traditional natural resource, the continent would rank as one of its biggest producers.
Now this may not be immediately obvious. Official indices of Social Capital put African nations near the bottom of the rankings, with Scandinavian countries at the top — and to be sure if Social Capital is measured, as it is by Solability, as “the sum of social stability and the well-being (perceived or real) of the entire population”, then this makes sense.
But anyone who has family or friends in Africa, or has spent time on the continent will understand that this is a very particular measure — one clearly skewed towards mature, stable, industrial economies, and in Africa, misses something profound.
Whilst the countries that top the Solability index are famous for their welfare programmes and political and economic stability they are also characterised by a strong sense of individualism, by small families and single person households. They are countries where commitment to the whole is strong, but familial networks are relatively small (the average European family has 1.6 children), and the habit of extended family networks and the social capital that they embody are extremely rare.
Contrast this to the typical African family where women have an average of 4.5 children and people are embedded in networks of extended family, clan and tribe, with all of the reciprocal obligations that they bring — obligations that are in some ways strengthened by the absence of a government sponsored safety net, by the challenges of poor governance, economic hardship and the promise of prosperity.
Spend a little time around an average African family, and in particular if you are a typical European or North American you will feel viscerally this intense sense of extended family and community.
The brother, who turns out to be a second cousin, the Aunt who somehow organises everyone and everything; the melee of events when extended family descend upon the family house from the village or the far abroad, for a wedding or a funeral or a graduation. The brother from the US, the cousin from back home, the uncle from down the road, all bound together by shared bonds and a sense of belonging, of extended family, of clan and tribe.
It is these social obligations and networks that are at the heart of Africa’s growing prosperity, that are in more ways than one, its superpower.
Savings Groups
It is the reason why so many in the now 30 million strong African diaspora send money back home, a flow of wealth that is estimated at 40 Billion USD per annum (to Sub Saharan Africa alone).
It is why my friend Moutasim, the eldest of eleven, helped put three of his younger brothers through university; why a group of 10 young refugees whom I met, recipients of UN scholarships, worked together to each pool 10% of their award and create an 11th scholarship.
It is why Africans across the continent band together in groups of family and friends to borrow, loan, save and invest, saving together to access healthcare, pay for education and invest in business.
It is this last habit that is one of the most powerful expressions of Africa’s rich social capital. Savings groups, as they are known in the official literature have a name in every country on the continent and are the unofficial rails upon which money is saved, invested and distributed, to create wealth, to build a better future and help those in need.
Thrillingly, this ancient practice, this habit long associated with rural communities and micro-finance institutions is evolving, leveraged by the post mobile money generation to reflect their lives; tech savvy, aspirational, fast paced, urban, global and rich in social capital.
A New Generation
Take as an example, Mary, she is 35 and a corporate lawyer. Originally from Kenya, she currently lives in Seattle but travels back to East Africa on a regular basis. She is part of a 20 woman savings group with Africans from across the continent. Every month each member puts aside 1000 USD, providing one member of the group an injection of 20,000 dollars. Members have used this money to purchase property in Africa, cover health care costs for extended family members, undertake home improvements and invest in businesses.
Groups like this can be found everywhere in Africa and amongst the African diaspora in the United States, Europe, the Middle East and Australia. A practice that was once local, rural and analogue has become global, urban and digital and as Africans become more prosperous, so the sums of money involved increase too.
In the last month alone, I have spoken to six savings groups with a combined value of 100,000 USD a month or 1.2 million USD a year. The total estimated annual value held in savings groups around the world is 570 billion USD, 60 billion in Africa alone !
But where as the social systems that underpin these groups are advanced, the eco system of technologies that serve them are fragmented, discordant and high friction, creating problems of cost, coordination, trust and transparency.
Groups complain of the difficulty of maintaining clear records, of tracking payments, investing money, organising loans, making local and international transfers, agreeing goals and coordinating people. And yet, so valuable is this practice to group members, they persist.
Social + (Fintech)
The opportunity for companies that consciously combine social networks with their product or service is immense. What Silicon valley calls Social + or in the case of financial services, Social + fintech has in Africa long been standard practice.
Where as others are re-learning the art of financial collaboration Africans have grown up with the idea and in the absence of bespoke solutions have hacked together their own products and services using a mixture of analogue and digital technologies.
The technology building blocks are all there. Africa is on the leading edge of the mobile payments eco-system. Messaging apps and social media are widely used, smartphones are being adopted at a rapid pace, the remittances market is increasing customer choice, driving down fees and expanding cross border flows and web3 technologies hold the promise of lower cost, improved security and greater access.
Now in the case of savings groups for example, imagine a product that allows people to operate their groups regardless of geography, that solves for the problem of coordination, supports in app messaging, creates transparency, ensures security, allows cross border payments and enables groups to access best in class saving and loans products.
Well you need imagine no more. That one we are building here at Moja, a product that will enable family and friends to save, invest and send money, wherever they are in the world.
We are investing in Africa’s richest resource, its social capital, wrapping technology around people, creating a savings group experience that is simple, seamless and borderless, turbo charging a traditional practice and helping to bring Africa’s super power roaring into the 21st century. Join us.
